Item 6. Selected Financial Data

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Item 6. Selected Financial Data

The table below compares O’Reilly Automotive, Inc.’s (the “Company”) selected financial data over a ten-year period.



Years ended December 31,	2018		2017		2016		2015		2014		2013		2012		2011		2010		2009
(In thousands, except per share, Team Members, stores and ratio data)
INCOME STATEMENT DATA:
Sales ($)	9,536,428		8,977,726		8,593,096		7,966,674		7,216,081		6,649,237		6,182,184		5,788,816		5,397,525		4,847,062
Cost of goods sold, including warehouse and distribution expenses	4,496,462		4,257,043		4,084,085		3,804,031		3,507,180		3,280,236		3,084,766		2,951,467		2,776,533		2,520,534
Gross profit	5,039,966		4,720,683		4,509,011		4,162,643		3,708,901		3,369,001		3,097,418		2,837,349		2,620,992		2,326,528
Selling, general and administrative expenses	3,224,782		2,995,283		2,809,805		2,648,622		2,438,527		2,265,516		2,120,025		1,973,381		1,887,316		1,788,909
Former CSK officer clawback	—		—		—		—		—		—		—		(2,798	)	—		—
Legacy CSK Department of Justice investigation charge	—		—		—		—		—		—		—		—		20,900		—
Operating income	1,815,184		1,725,400		1,699,206		1,514,021		1,270,374		1,103,485		977,393		866,766		712,776		537,619
Write-off of asset-based revolving credit agreement debt issuance costs	—		—		—		—		—		—		—		(21,626	)	—		—
Termination of interest rate swap agreements	—		—		—		—		—		—		—		(4,237	)	—		—
Gain on settlement of note receivable	—		—		—		—		—		—		—		—		11,639		—
Other income (expense), net	(121,097	)	(87,596	)	(62,015	)	(53,655	)	(48,192	)	(44,543	)	(35,872	)	(25,130	)	(35,042	)	(40,721	)
Total other income (expense)	(121,097	)	(87,596	)	(62,015	)	(53,655	)	(48,192	)	(44,543	)	(35,872	)	(50,993	)	(23,403	)	(40,721	)
Income before income taxes	1,694,087		1,637,804		1,637,191		1,460,366		1,222,182		1,058,942		941,521		815,773		689,373		496,898
Provision for income taxes (a)(b)	369,600		504,000		599,500		529,150		444,000		388,650		355,775		308,100		270,000		189,400
Net income ($) (a)(b)	1,324,487		1,133,804		1,037,691		931,216		778,182		670,292		585,746		507,673		419,373		307,498
Basic earnings per common share:
Earnings per share – basic ($)	16.27		12.82		10.87		9.32		7.46		6.14		4.83		3.77		3.02		2.26
Weighted-average common shares outstanding – basic	81,406		88,426		95,447		99,965		104,262		109,244		121,182		134,667		138,654		136,230
Earnings per common share -assuming dilution: (a)(b)
Earnings per share – assuming dilution ($)	16.10		12.67		10.73		9.17		7.34		6.03		4.75		3.71		2.95		2.23
Weighted-average common shares outstanding – assuming dilution	82,280		89,502		96,720		101,514		106,041		111,101		123,314		136,983		141,992		137,882
SELECTED OPERATING DATA:
Number of Team Members at year end	78,882		75,552		74,580		71,621		67,569		61,909		53,063		49,324		46,858		44,880
Number of stores at year end (c)	5,219		5,019		4,829		4,571		4,366		4,166		3,976		3,740		3,570		3,421
Total store square footage at year end (d)	38,455		36,685		35,123		33,148		31,591		30,077		28,628		26,530		25,315		24,200
Sales per weighted-average store (e)($)	1,842		1,807		1,826		1,769		1,678		1,614		1,590		1,566		1,527		1,424
Sales per weighted-average square foot (d)(f)($)	251		248		251		244		232		224		224		221		216		202
Percentage increase in comparable store sales (g)	3.8	%	1.4	%	4.8	%	7.5	%	6.0	%	4.6	%	3.5	%	4.6	%	8.8	%	4.8	%



Years ended December 31,	2018		2017		2016		2015		2014		2013		2012		2011		2010		2009
(In thousands, except per share, Team Members, stores and ratio data)
SELECT BALANCE SHEET AND CASH FLOW DATA:
Working capital (h)($)	(350,918	)	(249,694	)	(142,674	)	(36,372	)	252,082		430,832		478,093		1,028,330		1,029,861		900,857
Total assets (h)($)	7,980,789		7,571,885		7,404,189		6,676,684		6,532,083		6,057,895		5,741,241		5,494,174		5,031,950		4,695,536
Inventory turnover (i)	1.4		1.4		1.5		1.5		1.4		1.4		1.4		1.5		1.4		1.4
Accounts payable to inventory (j)	105.7	%	106.0	%	105.7	%	99.1	%	94.6	%	86.6	%	84.7	%	64.4	%	44.3	%	42.8	%
Current portion of long-term debt and short-term debt ($)	—		—		—		—		25		67		222		662		1,431		106,708
Long-term debt, less current portion (h)($)	3,417,122		2,978,390		1,887,019		1,390,018		1,388,397		1,386,828		1,087,789		790,585		357,273		684,040
Shareholders’ equity ($) (a)	353,667		653,046		1,627,136		1,961,314		2,018,418		1,966,321		2,108,307		2,844,851		3,209,685		2,685,865
Cash provided by operating activities (k) ($)	1,727,555		1,403,687		1,510,713		1,345,488		1,190,430		908,026		1,251,555		1,118,991		703,687		285,200
Capital expenditures ($)	504,268		465,940		476,344		414,020		429,987		395,881		300,719		328,319		365,419		414,779
Free cash flow (k)(l)($)	1,188,584		889,059		978,375		868,390		760,443		512,145		950,836		790,672		338,268		(129,579	)


(a)	During the year ended December 31, 2017, the Company adopted a new accounting standard that requires excess tax benefits related to share-based compensation payments to be recorded through the income statement. In compliance with the standard, the Company did not restate prior period amounts to conform to current period presentation. The Company recorded a cumulative effect adjustment to opening retained earnings, due to the adoption of the new accounting standard. See Note 1 “Summary of Significant Accounting Policies” to the Consolidated Financial Statements of the annual report on Form 10-K for the year ended December 31, 2017, for more information.

(a)

During the year ended December 31, 2017, the Company adopted a new accounting standard that requires excess tax benefits related to share-based compensation payments to be recorded through the income statement. In compliance with the standard, the Company did not restate prior period amounts to conform to current period presentation. The Company recorded a cumulative effect adjustment to opening retained earnings, due to the adoption of the new accounting standard. See Note 1 “Summary of Significant Accounting Policies” to the Consolidated Financial Statements of the annual report on Form 10-K for the year ended December 31, 2017, for more information.


(b)	Following the enactment of the U.S. Tax Cuts and Jobs Act in December of 2017, the Company revalued its deferred income tax liabilities, which resulted in a one-time benefit to the Company’s Consolidated Statement of Income for the year ended December 31, 2018 and 2017. See Note 13 “Income Taxes” to the Consolidated Financial Statements of this annual report on Form 10-K for more information.

(b)

Following the enactment of the U.S. Tax Cuts and Jobs Act in December of 2017, the Company revalued its deferred income tax liabilities, which resulted in a one-time benefit to the Company’s Consolidated Statement of Income for the year ended December 31, 2018 and 2017. See Note 13 “Income Taxes” to the Consolidated Financial Statements of this annual report on Form 10-K for more information.


(c)	In 2008, 2012 and 2016, the Company acquired CSK Auto Corporation (“CSK”), materially all assets of VIP Parts, Tires & Service (“VIP”) and Bond Auto Parts (“Bond”), respectively. The 2008 CSK acquisition added 1,342 stores, the 2012 VIP acquisition added 56 stores and the 2016 Bond acquisition added 48 stores to the O’Reilly store count. After the close of business on December 31, 2018, the Company acquired substantially all of the non-real estate assets of Bennett Auto Supply, Inc., including 33 stores that were not included in the 2018 store count and were not operated by the Company in 2018. Financial results for these acquired companies have been included in the Company’s consolidated financial statements from the dates of the acquisitions forward.

(c)

In 2008, 2012 and 2016, the Company acquired CSK Auto Corporation (“CSK”), materially all assets of VIP Parts, Tires & Service (“VIP”) and Bond Auto Parts (“Bond”), respectively. The 2008 CSK acquisition added 1,342 stores, the 2012 VIP acquisition added 56 stores and the 2016 Bond acquisition added 48 stores to the O’Reilly store count. After the close of business on December 31, 2018, the Company acquired substantially all of the non-real estate assets of Bennett Auto Supply, Inc., including 33 stores that were not included in the 2018 store count and were not operated by the Company in 2018. Financial results for these acquired companies have been included in the Company’s consolidated financial statements from the dates of the acquisitions forward.


(d)	Total square footage includes normal selling, office, stockroom and receiving space.


(e)	Sales per weighted-average store are weighted to consider the approximate dates of store openings, acquisitions or closures.


(f)	Sales per weighted-average square foot are weighted to consider the approximate dates of store openings, acquisitions, expansions or closures.


(g)	Comparable store sales are calculated based on the change in sales of stores open at least one year and excludes sales of specialty machinery, sales to independent parts stores, sales to Team Members, sales from Leap Day during the years ended December 31, 2016 and 2012, and sales during the one to two week period certain CSK branded stores were closed for conversion. Online sales, resulting from ship-to-home orders and pick-up-in-store orders, for stores open at least one year, are included in the comparable store sales calculation.

(g)

Comparable store sales are calculated based on the change in sales of stores open at least one year and excludes sales of specialty machinery, sales to independent parts stores, sales to Team Members, sales from Leap Day during the years ended December 31, 2016 and 2012, and sales during the one to two week period certain CSK branded stores were closed for conversion. Online sales, resulting from ship-to-home orders and pick-up-in-store orders, for stores open at least one year, are included in the comparable store sales calculation.


(h)	Certain prior period amounts have been reclassified to conform to current period presentation, due to the Company’s adoption of new accounting standards during the fourth quarter ended December 31, 2015. See Note 1 “Summary of Significant Accounting Policies” to the Consolidated Financial Statements of the annual report on Form 10-K for the year ended December 31, 2015.


(i)	Inventory turnover is calculated as cost of goods sold for the last 12 months divided by average inventory. Average inventory is calculated as the average of inventory for the trailing four quarters used in determining the denominator.


(j)	Accounts payable to inventory is calculated as accounts payable divided by inventory.


(k)	Certain prior period amounts have been reclassified to conform to current period presentation, due to the Company’s adoption of a new accounting standard during the first quarter ended March 31, 2017. See Note 1 “Summary of Significant Accounting Policies” to the Consolidated Financial Statements of the annual report on Form 10-K for the year ended December 31, 2017, for more information.


(l)	Free cash flow is calculated as net cash provided by operating activities less capital expenditures and excess tax benefit from share-based compensation payments for the period.

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